What does CHUEE stand for?
CHUEE stands for China Utility-Based Energy Efficiency Finance Program.
What is the purpose of CHUEE?
Its goal is to reduce emissions of greenhouse gases in the delivery of energy services in China. CHUEE will organize and provide marketing, engineering, project development, and equipment financing services to commercial, industrial, institutional and multi-family residential sector energy users to directly support implementation of energy efficiency projects.
By how much can CHUEE reduce greenhouse gas emissions?
The IFC estimates that CHUEE will directly support the financing of US$150 million in energy efficiency projects, which will reduce an estimated 4.1-8.6 million tons of carbon emissions.
Why was CHUEE created?
CHUEE was created in response to a request to the IFC from the Chinese Ministry of Finance Global Environmental Facility Focal Point to design and implement a new private-sector based energy efficiency and/or renewable energy finance initiative.
What are the GEF, IFC and IFC-PEP China? What roles do they play in CHUEE?
The Global Environment Facility (GEF), established in 1991, helps developing countries fund projects and programs that protect the global environment. GEF grants support projects related to biodiversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants. CHUEE is supported by GEF funds under the Climate Change focal area.
The International Finance Corporation (IFC) is the private sector arm of the World Bank Group. IFC coordinates its activities with the other institutions of the World Bank Group, but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.
Its mission is to promote sustainable private sector investment in emerging economies, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in emerging economies, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. IFC designed the CHUEE Program on the request of the Ministry of Finance, the Chinese government in 2005.
CHUEE established a Program Management Office to act as the local implementation for the Program. The office is located within IFC's main China country office in Beijing and liaises directly with the International Department of the Chinese Ministry of Finance.
The IFC Private Enterprise Partnership for China (IFC PEP-China), initially known as the China Project Development Facility (CPDF), was established in 2001 in Chengdu as a multi-donor facility managed by the IFC to support small and medium-size enterprise development in Sichuan.
Its aim is to contribute to sustainable private sector development across China, especially in less developed Western regions. Other donors supporting the operations of IFC PEP-China include the United Kingdom Department for International Development, which has approved a $3 million contribution, and the Ministry of Trade and Industry of Finland along with the GEF, which are contributing over $8 million.
IFC PEP-China will provide in-country management, administration and operational support to the CHUEE Program Management Office.
Can I take part in CHUEE?
CHUEE is designed to engage different stakeholders by building on their own self-interest, taking advantage of their strengths, and making it as simple as possible to participate. It leverages the interests of three distinct industries (energy utilities, energy efficiency equipment and service suppliers and financial institutions) to generate investment through multiple market channels. CHUEE welcomes any of the following to join the program:
Financial Institutions
Commercial banks will be selected to provide loans for energy efficiency equipment and projects. Bank lending will be supported by an IFC risk sharing facility. Under this structure, IFC provides partial first and second loss risk coverage to the partner banks, who in turn partner with utilities to generate highly scalable and standardized equipment loans. The Program will build energy efficiency finance capacities and experience within its partner financial institutions. The sustainability of the Program will be linked in part to its success in helping financial institutions develop sustainable lending businesses for energy efficiency projects.
The IFC has extensive experience in training and capacity building of financial institutions for energy efficiency, small and medium-sized enterprise and environmental finance. Through IFC PEP-China, the IFC builds capacity in small and medium-sized enterprises in southwest China. The IFC will engage a senior bank specialist to provide technical assistance to partner banks.
Energy Efficiency Equipment and Service Suppliers
Companies who manufacture, sell and deliver energy efficiency products and services will, in alliance with the utilities, have critical roles in marketing and delivering energy efficiency projects and services. They will benefit from increased sales of their products facilitated through the aggregation of customers, enhanced access to finance for energy efficiency projects, and GEF-supported technical assistance to build capacity.
For example, Jiangsu Shuangliang AC Co. Ltd. supplies gas-fired absorption coolers and other large-scale air-conditioning equipment. Its clients (including commercial buildings, hotels, hospitals and airports), have high-volume needs. It has limited experience with equipment finance and CHUEE has provided some financial guarantees to support sales of their equipment.
Utilities
The utility partners will play a market aggregator role, systematically identifying potential energy efficiency projects within a service territory, and offering end-users energy efficiency services, including equipment and finance packages designed to meet typical energy use needs. The introduction of utility hubs into the Chinese energy efficiency market can bring about large-scale transactional efficiencies, as the utility can take advantage of its relationships with customers to market energy efficiency to them, and can act as a "one-stop shop" to provide access to energy efficiency engineering and financing.
For example, Xinao Gas is a private gas utility company with concessions for 59 cities. This Program has assisted Xinao Gas to increase gas sales and accelerate gas market penetration, develop new business lines in energy equipment and services, provide better services to customers and fulfill government energy policies.
Energy Management Companies (EMCs)
EMCs are professional companies offering specialized energy efficiency services through providing engineering evaluation, energy efficiency audits, advisory services, etc. They are playing growingly important role in promoting the application of energy efficiency technology and methodology to energy end-users in China. EMCs have wide and relatively mature network with energy efficiency equipment suppliers and end-users, and will be active partners of the CHUEE Program.
Energy End-users
The types of end-users targeted include industrial, commercial, small and medium-sized enterprises, municipal, institutional, and multi-family residential sector customers seeking to develop, finance and implement energy efficiency projects in their facilities to minimize their energy costs.
For example, Shijiazhuan Steel Company is preparing a project to substitute gas for coal in their kiln that produces lime for steel manufacturing. This project has an estimated 2.5 year payback period and will save considerably on coal processing and kiln equipment maintenance costs, as well as producing a purer lime that will improve steel quality and reduce the waste of steel. This steel company is also considering gas conversions for their steel rolling furnace and has further (non-gas) heat recovery projects under development, all of which could benefit from this Program's technical assistance and financing services.
What benefits can CHUEE bring to its partners?
Financial Institution Partners
Local commercial banks will be selected to establish partnerships with the IFC to participate in the Program. Banks will provide energy equipment loans and related loan origination and administration services. The IFC will provide: 1) a risk sharing facility to share with the bank in credit risks of loans, which the banks will fund with their own resources, and 2) substantial technical assistance to improve bank credit risk management practices, support marketing of bank financial services and prepare energy efficiency projects for investment.
Energy Efficiency Suppliers
CHUEE will create a network of qualified energy efficiency suppliers who can deliver necessary energy efficiency equipment and services. Energy efficiency suppliers will market their projects and services to customers in coordination with the utility.
The Program will recruit international energy efficiency equipment suppliers to China as part of its market development activities to promote expanded access to energy efficiency technology. It will also improve the quality of energy efficient equipment by providing training, capacity building and other business development services to participating energy efficiency suppliers.
Finally, CHUEE will work with partner banks and energy efficiency suppliers to develop multiple marketing channels to generate energy efficiency project deal flow, in addition to the utility channel.
Utility Partners
CHUEE will assist to in building energy using loads, supporting investment on the customer side of the meter to make energy using equipment affordable and enabling concurrent efficiency investments which can make energy using systems more cost effective. A gas utility is expected to be the first partner, but the program is potentially applicable to electric utilities and heat utilities as well.
Energy End-users
CHUEE will support end-users in making equipment purchase decisions based on equipment life-cycle and energy operating costs, and not just low first costs.
What kind of technical assistance can CHUEE partners receive?
Financial Institutions will be eligible to substantial technical assistance to improve bank credit risk management practices, support marketing of bank financial services and prepare energy efficiency projects for investment.
Energy Efficiency Suppliers participating in the Program will receive training, capacity building and other business development services focusing on marketing and finance.
Utility Partners will receive training in setting up a utility-based energy efficiency hub and enter into partnership with financial institutions and energy efficiency equipment vendors on the condition that they meet certain criteria (including willingness to co-finance the Program and commit significant marketing resources).
End-users will be provided with services covering the full energy efficiency project cycle, from energy audit and project feasibility studies, through decision-support, equipment procurement and financing.
What is a Risk Share Facility (RSF)?
With the IFC's Risk Share Facility (RSF), banks will make loans accessible to a broader set of customers and on more attractive terms and tenors of three to five years. The IFC's RSF will be structured on more private sector oriented commercial terms that encourages the development of capital markets to move towards international standards.
What is an energy efficient supplier network?
CHUEE will create a network of qualified energy efficiency suppliers who can deliver necessary energy efficiency equipment and services. Energy efficiency suppliers will market their energy efficiency projects and services to customers, in coordination with the utility. The IFC will conduct Request for Information processes to solicit information from equipment and service providers. This information will be used by utilities and provided to customers. CHUEE will support end-users in making equipment purchase decisions based on equipment life-cycle and energy operating costs, and not just low first costs.
How can I get involved?
Utilities and Financial Institutions who want to become a CHUEE partner:
Please contact the CHUEE program management office for details
Energy Efficiency Suppliers who want to join the network:
Please fill out the RFI form (HERE) and send it to the CHUEE program management office. For additional details please contact the CHUEE program management office directly.
End-users who want to join the program:
Please contact the CHUEE program management office for details
How can I contact CHUEE?
We can be contacted at:
China Utility-Based Energy Efficiency Finance Program
Room 1501, China World Tower 2
No. 1, Jian Guo Men Wai Avenue
Beijing 100004, China
Tel: +(86) 10 5860-3000Fax: +(86) 10 5860-3105 Email: chuee@ifc.org
